There has been a lot of discussion and even more speculation over the last few months about the possible superannuation changes that may occur in next month’s budget. Whilst no-one can be definite about the changes there have been a couple of items that have had some support amongst commentaries.
Transition to Retirement Income Stream (TRIS)
Currently there is no requirement on the member to show that they are transitioning to retirement by reducing their working hours. There are two schools of thought as to what the government might do in the budget. The first is to introduce a form of work test that limits the number of hours per week a member is allowed to be working before a TRIS can be established; the second is to abolish TRIS all together. It is expected that if the later does prevail, existing TRIS before budget night will be grandfathered.
If you are concerned with this possible budget outcome then discuss with your SMSF clients about establishing a TRIS before then. Note that the Trust Deed needs to allow for the establishment of a TRIS.
Reduction of Contribution Thresholds
There has been discussion about putting in place contribution lifetime caps as well as reducing the contribution thresholds for (in particular) concessional contributions. Thoughts are of a reduction in the concessional threshold from $30,000 to $20,000 for members under 50 years of age. Although no reduced amounts have been expressed for non concessional contributions some commentaries believe that it may also be looked at.
If you are concerned with the possible reductions in contribution thresholds, for this year at least ensure your SMSF clients contribute up to their contribution maximums.
With the reduction in the asset thresholds for the age pension coming into play on 1 January 2017, the ability to contribute large non concessional amounts into super for non age pension members, i.e. members under 65 years of age, may prove more difficult in later years should the non concessional threshold be reduced.
Reduction of Div 293A Threshold
Finally, with Labor already looking to reduce the Div 293A income level to $250,000 should they get into power, the Liberals according to the Australian Financial Review is looking at a lower amount of $180,000.
Although these changes are speculative, dealing with these possible changes are well within the rules of most Trust Deeds and current legislation. Always look at your SMSF client Trust Deed and ultimately act in the best interests of the member.
April 2016 ~ Fabio Salvatore, Concise Super
© Concise Super 2016